Verizon is currently offering a multi-room dvr free for life as part of its 2YR TV, Internet, and Phone package (Triple Play). The free set-top box amounts to a savings of $19.99 per month. If one chooses a cable card, instead of the multi-room dvr, there is a cost of $3.99 a month. This amounts to a $23.98 penalty for selecting a cable card for this package.

This is a violation of FCC CableCard rule:

"Pay only for equipment you have. Your operator must give you a discount on any packages that include the price of a set-top box if you choose to use your own CableCARD-enabled device. FCC Rule 76.1205(b)(5)."

Verizon is appeasing CableCard users by automatically giving the alternative promotion, a $250 gift card. However, CableCard subscribers should have a choice between the discount or the gift card. The discount is obviously the wiser choice, as it is a long-term savings and surpasses the value of the gift card in the 11th month of the 24 month term (250/23.98=10.4).

Interesting. I'm not sure why they think that meets the requirements of the FCC rule. Sounds like they figure that it's a way to avoid configuring the appropriate discount in their system since (they hope) there won't be many people taking advantage of it anyway.

This promotion has been around for a while but I never thought getting something for free was a "penalty".

That being said, I think the loophole here is that Verizon doesn't technically include boxes as part of any service packages. You can either take the free DVR or the VISA as a bonus for signing up. They otherwise handle boxes as separate charges. So it's debatable if the FCC rule applies in this case.

This is opposed to actual bundling where a cableco would require you to take a DVR to get a digital package at a specific price, for example. That's the FCC's intent.

That being said, it wouldn't hurt them to offer a free cablecard in its place. But as far as the FCC rules go, I'm not so certain.

You're absolutely correct, getting something for free is not a penalty -- for those who do not use CableCards and opt to receive a multi-room dvr free for life as part of the Triple Play package. The penalty is to the TiVo / CableCard subscribers who get nothing, and in fact are charged an additional $3.99, for subscribing to the same Triple Play package.

* Non-CableCard subscriber is charged $99.99/mo for the Triple Play package and has the option to receive a set-top box free for life, a discounted value of $19.99/mo.

* CableCard subscriber is charged $99.99/mo for the Triple Play package and supplies their own set-top box. They not only receive nothing, they are charged $3.99 for the CableCard they require for the package.

A non-CableCard subscriber receives the same service and a free set-top box for the same price as a CableCard subscriber who purchased their set-top box. The CableCard subscriber is penalized for having bought his or her set-top box. As I read it, the promotion violates the FCC regulation.

"Pay only for equipment you have. Your operator must give you a discount on any packages that include the price of a set-top box if you choose to use your own CableCARD-enabled device. FCC Rule 76.1205(b)(5)."

Addressing the gift card, I agree that non-CableCard subscribers have the option with the Triple Play package to take the multi-room DVR free for life ($19.99/mo discount) or the $250 gift card. CableCard subscribers are forced to take the $250 gift card, without the option to accept the plan's optional discount -- the obviously better choice since it will surpass the value of the $250 gift card in about 12 months.

Aren't the people who are getting the free DVR for life getting penalized. They will be using the crappy FiOS DVR. If FiOS offered to give me free TV service and DVRs for life, but I would have to give up my TiVos, I would not even consider taking it. The FiOS DVrs, like typical cable companiy DVRs pale in comparison to a TiVo.

At one point I had eight cable cards with FiOS. Although at that time they were only $2.99 a card. I'm down to three cable cards with them now. I have no complaints though since my current two year contract I signed earlier this year is the lowest I've paid for FiOS service in the five years I've had them. Plus I have faster internet speeds and more TV programming.
For $110 a month(plus taxes and cable cards) I have Ultimate HD, 35/35 Internet, and Digital Voice. Plus I got a $327 gift card on top of all that when I signed up for two more years.

You're absolutely correct, getting something for free is not a penalty -- for those who do not use CableCards and opt to receive a multi-room dvr free for life as part of the Triple Play package.

That's the thing, full stop. The DVR isn't "part" of the triple play package. They don't force it as a condition of the service package.

The first rule you list says they can charge you for a cablecard, they just can't charge you an additional fee for using your own equipment. You may be zoning in on the second part of that and thinking you can get a free cablecard, but that would ignore the first part.

The second rule doesn't apply as the DVR is not a condition of the package. The package price is the same with or without it. But even if we assume it did apply, the cost would effectively be $0 since it's free. So your discount would be $0.

As I said, it wouldn't hurt them to offer a cablecard instead; it would be nice if they did. But it's not illegal for them to incentivize with free or discounted equipment, or other freebies. The keyword there being equipment, not the service package.

So, that's my case explaining why I don't think it applies.

Edit: You kind of changed up your post a bit but I won't edit this one to match it, everything still applies.

That's the thing, full stop. The DVR isn't "part" of the triple play package. They don't force it as a condition of the service package.

The first rule you list says they can charge you for a cablecard, they just can't charge you an additional fee for using your own equipment. You may be zoning in on the second part of that and thinking you can get a free cablecard, but that would ignore the first part.

The second rule doesn't apply as the DVR is not a condition of the package. The package price is the same with or without it. But even if we assume it did apply, the cost would effectively be $0 since it's free. So your discount would be $0.

As I said, it wouldn't hurt them to offer a cablecard instead; it would be nice if they did. But it's not illegal for them to incentivize with free or discounted equipment, or other freebies. The keyword there being equipment, not the service package.

So, that's my case explaining why I don't think it applies.

Edit: You kind of changed up your post a bit but I won't edit this one to match it, everything still applies.

That's my interpretation too. Their boxes aren't part of the triple-play package. Their box rentals are charged separately. And the FCC rule only applies to the service packages -- it basically prevents them from bundling in the equipment with the service package, which would force you to use their equipment in order to get the bundled savings.

BigJimOutlaw -- Sorry for the mods while you were replying. I don't think I changed the theory I was defending, just trying to be more clear.

Understood, no subscriber is forced to accept a $19.99/mo discount via a multi-room DVR free for life, which is offered with the Triple Play package. Although, I don't think we're really talking about the people who have the option to go multi-room DVR free for life, gift card, or standard set-top box for a fee. We're talking about the people who don't have an option to accept a discount, because they've already laid out the cash for their own set-top box already. But, I will agree to disagree.

Even if we disagree with the wording of the regulation, the issue I have is the violation of its intent. The intent of ALL the FCC CableCard regulations is to prevent the cable TV providers from creating a monopoly of the set-top box. Effectively cutting the third-party set-top manufactures out of the market, by charging CableCard subscribers fees or offering discounted or free set-top boxes that a CableCard subscriber is not afforded. For example, the cable TV providers being required to supply CableCards, so TiVo can supply an equal (in our case greater) experience on a TV provider's network; starter kits, so the cable provider can't hit you with a fee to perform a CableCard install; and, the regulation in question, insisting a CableCard subscriber receives the same discount a cable set-top box subscriber can get.

Each regulation is to ensure there is a level playing field between the cable providers and the third-party set-top manufactures. Giving a non-CableCard subscriber the option of a free set-top box, the equivalent of a $19.99/mo discount, which obviously is subsidized by something (the package), while the third-party set-top manufactures have no way to subsidize the device and CableCard subscribers are not afforded the same potential discount is not a level playing field between the cable TV providers and third-party set-top manufactures.

Essentially, Verizon is saying they can provide the service (TV and phone) for $80 (package - set-top discount: 99.99 - 19.99 = $80), while telling CableCard subscribers they have to pay $99.99 for service alone. Why would anyone buy TiVo costing $149 and up, plus monthly / life-time fee, if there is not benefit to bringing your own to your cable provider. This is exactly what the regulation is trying to prevent. Third-party set-top manufactures cannot possibly compete with that.

aaronwt -- LOL I agree! I stuck with the original Philips TiVo for years until TiVo created an HD box, because 1) it just looked so cool and 2) I couldn't give it up -- even for HD service via a Comcast box. To my point above, concerning the regulation, its not those of us who know TiVo and its awesomeness... its the people who don't know it as well and are trying to justify buying it. In the end, this hurts the third party set-top providers such as TiVo because FiOS is leveraging the plan to giveaway the set-top box.

That's my interpretation too. Their boxes aren't part of the triple-play package. Their box rentals are charged separately. And the FCC rule only applies to the service packages -- it basically prevents them from bundling in the equipment with the service package, which would force you to use their equipment in order to get the bundled savings.

I agree that a result of the regulation is that you are not forced to use a cable provider's equipment. However, I believe the intent of the regulation is slightly larger than that. I believe the regulation, like most regulations, is to prevent a monopoly. Basically protecting companies like TiVo, by not penalizing subscribers with extra fees for bringing their own set-top or allowing the cable providers to discount their own equipment making it not worth bringing your own set-top.

( 2 ) For any bundled offer combining service and an operator-supplied
navigation device into a single fee, including any bundled offer
providing a discount for the purchase of multiple services, such
provider shall make such offer available without discrimination to any
customer that owns a navigation device, and, to the extent the customer
uses such navigation device in lieu of the operator-supplied equipment
included in that bundled offer, shall further offer such customer a
discount from such offer equal to an amount not less than the monthly
rental fee reasonably allocable to the lease of the operator-supplied
navigation device included with that offer. For purposes of this
section, in determining what is "reasonably allocable," the Commission
will consider in its evaluation whether the allocation is consistent
with one or more of the following factors:

( i ) An allocation determination approved by a local, state, or
Federal government entity;

( ii ) The monthly lease fee as stated on the cable system rate card
for the navigation device when offered by the cable operator separately
from a bundled offer; and

( iii ) The actual cost of the navigation device amortized over a
period of no more than 60 months.

For an offer like this "combining service and an operator-supplied navigation device into a single fee" the carrier is required to provide a discount to a customer who proves their own equipment "equal to an amount not less than the monthly rental fee reasonably allocable to the lease of the operator-supplied navigation device included with that offer."

The rule then explains how they determine what is "reasonably allocable". Free is not an option just because FiOs says that it's free.

I think you guys are missing the rationale behind the Verizon deal. If a customer has one of their boxes they have access to Pay-Per-View programming and special events. This is potential income for Verizon that can easily offset the cost of the set-top box. Subscribers that get cablecards do not get the same access to PPV and special programming so there's no incentive for Verizon to give away cablecards for free. The only revenue they'll get from cablecard users is the rental fee for the cards.

Verizon's in business to make money so don't expect them or anyone else to give you something for free when there's no chance they'll get a return on their investment. The whole idea that Verizon is penalizing cablecard users is pure BS so quit whining about it. Frankly, I think that anyone that has to use their DVR are the ones being penalized. I've got several cablecards for use in HTPCs. I don't pay Verizon for PPV nor do I have to pay Tivo to use their software. I already get DVR service for free.

I think you guys are missing the rationale behind the Verizon deal. If a customer has one of their boxes they have access to Pay-Per-View programming and special events. This is potential income for Verizon that can easily offset the cost of the set-top box. Subscribers that get cablecards do not get the same access to PPV and special programming so there's no incentive for Verizon to give away cablecards for free. The only revenue they'll get from cablecard users is the rental fee for the cards.

Verizon's in business to make money so don't expect them or anyone else to give you something for free when there's no chance they'll get a return on their investment. The whole idea that Verizon is penalizing cablecard users is pure BS so quit whining about it. Frankly, I think that anyone that has to use their DVR are the ones being penalized. I've got several cablecards for use in HTPCs. I don't pay Verizon for PPV nor do I have to pay Tivo to use their software. I already get DVR service for free.

Then they need to offer VOD on devices like the Xbox 360 like Comcast is doing. Then I would consider using FiOS VOD. Instead of them offering linear IP channels on the 360 which makes zero sense because you have to watch the channels live in realtime.

For an offer like this "combining service and an operator-supplied navigation device into a single fee" the carrier is required to provide a discount to a customer who proves their own equipment "equal to an amount not less than the monthly rental fee reasonably allocable to the lease of the operator-supplied navigation device included with that offer."

The rule then explains how they determine what is "reasonably allocable". Free is not an option just because FiOs says that it's free.

Thanks, nrc. I had been looking for the actual text of the regulation. This confirms my understanding of the regulation.

"For any bundled offer combining service and an operator-supplied navigation device into a single fee, INCLUDING ANY BUNDLED OFFER PROVIDING A DISCOUNT FOR THE PURCHASE OF MULTIPLE SERVICES [...]"

If you bundle TV, Phone, and Internet service you receive the discount of a multi-room DVR.

"[...] shall further offer such customer [CardCard subscriber] a discount from such offer equal to an AMOUNT NOT LESS than the monthly rental fee reasonably allocable to the lease of the operator-supplied navigation device [...]"

The CableCard subscriber's device has to be equal, not less, than the equipment the cable provider is supplying the discount of.

It is written to ensure someone is not benefiting from using cable provided equipment or that a CableCard subscriber is not getting over on the cable provider (as if that's possible) -- leveling the playing field between the cable provider and third-party set-top manufactures.

It makes sense that the CableCard subscriber would have to prove they are using a device equal to the amount of the discount, not less. Otherwise one could go get a cheap device -- the third-party set-top manufactures lose the sale of a comparable device and the subscriber reaps a discount on the back of Verizon.

It also makes sense that the CableCard subscriber is entitled to the actual value of the device they are using, amortized over 60 months. Since the cable provider would, in theory, need to supply new devices by this time, creating an additional cost to them.

This ensures one can can chose the cable providers device or pay for an equal third-party device and receive similar discounts / pay comparable rates.

Luckily, I have a four tuner premier, so there is no question about the device comparison and cost. That all being said, I cant imagine what a pain it's going to be discussing this with a Verizon rep.

I think you guys are missing the rationale behind the Verizon deal. If a customer has one of their boxes they have access to Pay-Per-View programming and special events. This is potential income for Verizon that can easily offset the cost of the set-top box. Subscribers that get cablecards do not get the same access to PPV and special programming so there's no incentive for Verizon to give away cablecards for free. The only revenue they'll get from cablecard users is the rental fee for the cards.

Verizon's in business to make money so don't expect them or anyone else to give you something for free when there's no chance they'll get a return on their investment. The whole idea that Verizon is penalizing cablecard users is pure BS so quit whining about it. Frankly, I think that anyone that has to use their DVR are the ones being penalized. I've got several cablecards for use in HTPCs. I don't pay Verizon for PPV nor do I have to pay Tivo to use their software. I already get DVR service for free.

Of course Verizon's rationale is get subcribers to use their set-top box, so they can make more money with VOD; have access to your viewing habits; etc. That is not the debate. The debate is that Verizon is leveraging its services to give a discount on its set-top, making it difficult or near impossible for a company like TiVo to compete.

The fact that Verizon has VOD and it's not accessible using third-party devices is actually a supporting factor of the debate. It's an incentive to use the cable provider set-top, especially when they advertise 'all' the free VOD you get. I would not doubt that within the next year or two they force cable providers to provide two-way CableCards to access VOD. No different then when they forced cable providers to supply m-cards, so that we could access multiple streams.

It really is not a matter of whining about the cost. Its a matter of there being regulations in place to protect TiVo, to enable it to be competitive and ensure we as consumers have options. You should be concerned the un-knowledgeable subscribers are taking the cable provided device, because of discounts. Every additional subscriber who does so increases the potential demise of TiVo.

That's the thing, full stop. The DVR isn't "part" of the triple play package. They don't force it as a condition of the service package.

After reading the regulation, in fact the cost of renting the device HAS to be spelled out separately to qualify.

Quote:

For purposes of this section, in determining what is "reasonably allocable," the Commission will consider in its evaluation whether the allocation is consistent with one or more of the following factors:

( ii ) The monthly lease fee as stated on the cable system rate card
for the navigation device when offered by the cable operator separately
from a bundled offer; and

Normalizing: To be acceptable, a cable provided device must have a published monthly fee when separated from the particular bundle it is offered with at a discount.

If there is not an associated cost for the device, separate from a particular package, its just free all around. In this case, Verizon for all intent and purpose never has a gain by linking the device to a particular package.

This is not the case here. If one chooses the double-play, instead of the Triple play, there is a $19.99/mo cost associated with the multi-room DVR.

I believe what this its trying to prevent is a monthly incentive for non-CableCard users to go a particular bundle and no incentive for CableCard users.

As a FiOS customer I'm always reading the FiOS threads, isn't it the case that Verizion's FiOS implementation and business model do NOT fall under FCC Cable TV regulations?

I can swear this has come up multiple times in the past 5 years. Verizon does tend to follow the rulings under the impression they may be applied in the future, but I recall them not having to implement. Customer Supplied hardware is the latest I'm thinking of, Verizon does not give that credit.

__________________"There is a distinct difference between having an open mind and having a hole in your head from which your brain leaks out."

Of course Verizon's rationale is get subcribers to use their set-top box, so they can make more money with VOD; have access to your viewing habits; etc. That is not the debate. The debate is that Verizon is leveraging its services to give a discount on its set-top, making it difficult or near impossible for a company like TiVo to compete.

The fact that Verizon has VOD and it's not accessible using third-party devices is actually a supporting factor of the debate. It's an incentive to use the cable provider set-top, especially when they advertise 'all' the free VOD you get. I would not doubt that within the next year or two they force cable providers to provide two-way CableCards to access VOD. No different then when they forced cable providers to supply m-cards, so that we could access multiple streams.

It really is not a matter of whining about the cost. Its a matter of there being regulations in place to protect TiVo, to enable it to be competitive and ensure we as consumers have options. You should be concerned the un-knowledgeable subscribers are taking the cable provided device, because of discounts. Every additional subscriber who does so increases the potential demise of TiVo.

The TiVo cost is much lower than you show, at least for lifetime service. Since you own the box and it has a high resale value with lifetime which allows you to recoup most of the cost. Which brings it much closer to the cost you show for the Verizon DVR. Of course this doesn't take into account the crappy user experience you get from the FiOS DVR. Having access to FiOS VOD certainly doesn't come anywhere close to negating that bad experience.

The TiVo cost is much lower than you show, at least for lifetime service. Since you own the box and it has a high resale value with lifetime which allows you to recoup most of the cost. Which brings it much closer to the cost you show for the Verizon DVR. Of course this doesn't take into account the crappy user experience you get from the FiOS DVR. Having access to FiOS VOD certainly doesn't come anywhere close to negating that bad experience.

I took the most current numbers right from the TiVo site. That being said, a user would only be entailed to what they actually paid amortized over 60 months, starting from the time of the purchase -- as described below.

Your point about the TiVo, or any third-party device, being better and having some continued value is taken into account in the regulation. While a Verizon multi-room DVR subscriber gets it free for life (a $20/mo discount according to Verizon), CableCard subscribers, with a similar device, can only make claim to the discount amortized over 60 months. The subscriber would then need to buy a new device to continue to make a claim for the discount.

To say you get a better experience with TiVo, it continues to have value, and you don't want the 'crappy' FiOS box is irreverent to the purpose of the regulation. The purpose is to prevent a set-top monopoly by the TV providers, who can use their service packages to off-set the cost of the set-top, while TiVo does not have that luxury. Meaning, if Verizon offers a discount on equipment for selecting a more expensive package, you are entailed to the same discount for buying a comparable (or better) third-party device and selecting that same package.

As a FiOS customer I'm always reading the FiOS threads, isn't it the case that Verizion's FiOS implementation and business model do NOT fall under FCC Cable TV regulations?

You may be thinking about the copper land land regulations. Back when, the government subsidized Ma Bell to bring copper lines to everyone. As such, Ma Bell, and then the 'baby bells', were forced to share the infrastructure. Verizon made the case that if they were to build out all new infrastructure (fiber), on their dollar, they shouldn't have to share it. The government agreed, if they took it all the way to the door. This is why Verizon chose to install all the way to the door and then disconnects your copper lines.

So the sharing of the infrastructure is what is no longer regulated on an all fiber network.

You may be thinking about the copper land land regulations. Back when, the government subsidized Ma Bell to bring copper lines to everyone. As such, Ma Bell, and then the 'baby bells', were forced to share the infrastructure. Verizon made the case that if they were to build out all new infrastructure (fiber), on their dollar, they shouldn't have to share it. The government agreed, if they took it all the way to the door. This is why Verizon chose to install all the way to the door and then disconnects your copper lines.

So the sharing of the infrastructure is what is no longer regulated on an all fiber network.

No, that's not at all what I was saying or thinking.
In many discussions on TCF over the years it's been brought up that FCC Cable company regulations do not apply to Verizon FiOS.

__________________"There is a distinct difference between having an open mind and having a hole in your head from which your brain leaks out."

No, that's not at all what I was saying or thinking.
In many discussions on TCF over the years it's been brought up that FCC Cable company regulations do not apply to Verizon FiOS.

I don't see why they wouldn't apply to FIOS. Many digital cable providers use a fiber optic backbone to distribute their signal, same as FIOS. The only difference is that FIOS brings the fiber optic right into the house where other providers split out the signal at the street and connect to the house via coax.

I don't see why they wouldn't apply to FIOS. Many digital cable providers use a fiber optic backbone to distribute their signal, same as FIOS. The only difference is that FIOS brings the fiber optic right into the house where other providers split out the signal at the street and connect to the house via coax.

I agree with that statement. U-verse isn't covered because it's IPTV, not because it's fiber.

No, that's not at all what I was saying or thinking.
In many discussions on TCF over the years it's been brought up that FCC Cable company regulations do not apply to Verizon FiOS.

When Verizon started rolling out FiOS, I recall Verizon claiming they shouldn't fall under the cable company regulations, because they are a utility or something like that.

On the other side of it... in Philadelphia, Comcast withheld from Verizon the Philadelphia Comcast Sportsnet channel, which holds the home game rights for all Philadelphia sports. Verizon obviously needing it to woo Philadelphia customers complained to the FCC. Comcast's stance is that they only had to share it with other 'cable providers'. The context was much more complicated than that, but that was the gist of the argument.

So, Verizon was playing both side of the fence and it didn't work. They are subjected to the cable TV regulations. Or, as I have heard it called during the Comcast, Verizon Comcast Sportnet feud... TV wire-line providers.

CableCARD rules cover all "Multichannel Video Programming Distributors" except those who are explicitly excluded or waived. FiOS was specifically classed as an MVPD. AT&T has claimed that U-Verse is excluded because their IPTV service does not meet the definition of an MVPD.

Interestingly, there's a RFC underway from the FCC right now where they're seeking comment on whether things like IPTV and OTT services constitute MVPDs.

Interestingly, all the Cable organizations are lining up behind the interpretation that IPTV should not be covered under rules for MVPDs. That seems odd initially given that IPTV is their competition right now. But it tells us that the large cable companies are hatching a plot to escape all the current cable regulations if they can get IPTV formally excluded.

Some said that the Verizon triple play package doesnt include a set top box and that is billed seperately. Since they are giving you a free DVR you dont have to pay the fee for the set top box needed to receive the package. So they are offering more than they give Tivo owners. Not only dont they have to pay the DVR rental fee they dont have to pay the set top box rental fee. In that case then they should be giving the cable cards for free also.

One approach might be to read the Public Knowledge filing which supports the position that the term “Multichannel Video Programming Distributor” encompasses all platforms that make available prescheduled “Video Programming” and make a comment expressing support for their position.

Satellite companies are already considered MVPDs. They were specifically exempted from CableCARD regulation because they were an emerging technology and promised to provide national competition for the cable industry.

If the Allvid initiative ever goes anywhere satellite companies would probably not be exempted.